Gold price rallies to 5-mo. high on hot U.S. inflation report

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(Kitco News) -Goldprices are solidly higher and hit a nearly five-month high in early U.S.dealings Wednesday, following a hot U.S. inflation reading. There were also hotinflation numbers coming out of China Wednesday. December gold was last up $16.30at $1,848.00 and December Comex silver was last up $0.282 at $24.58 an ounce.

Thejust-released U.S. consumer price index for October came in at up 0.9% and up6.2%, year-on-year. The CPI was expected to come in at up 0.6% from Septemberand up 5.9%, year-on-year. The October numbers are the highest U.S. CPI readingsin over 30 years. Tuesday's U.S. producer price index showed a rise of 8.6%,year-on-year.

Meantime,weekly U.S. jobless claims fell 4,000, to 267,000 in the latest reporting week.Those numbers were close to trade expectations. The weekly jobless claimsreport was released a day early due to the U.S. Veterans Day holiday on Thursday.

Globalstock markets were mixed in overnight trading. The U.S. stock indexes are pointedto weaker openings when the New York day session begins. Traders and investorsare a bit more risk-averse at mid-week--paying more attention to the prospects forrising and even problematic price inflation. China's producer price index onWednesday was reported up 13.5% in October, year-on-year, and up from a 10.7%rise in September. That is the fastest factory gate price rise on recent record.Extreme weather and coal shortages are being reflected in China's rising PPI.

Thekey outside markets today see the U.S. dollar index solidly higher. Nymex crudeoil prices are weaker and trading around $83.75 a barrel. Meantime, the 10-yearU.S. Treasury note yield is presently fetching 1.481%.

OtherU.S. economic data due for release Wednesday includes the weekly MBA mortgageapplications survey, real earnings, monthly wholesale trade, the weekly DOEliquid energy stocks report and the monthly Treasury budget statement.

Technically,December gold futures bulls have the firm overall near-term technical advantageand have momentum. A five-week-old uptrend is in place on the daily bar chart. Bulls'next upside price objective is to produce a close above solid resistance at $1,900.00.Bears' next near-term downside price objective is pushing futures prices belowsolid technical support at the November low of $1,758.50. First resistance is seenat $1,850.00 and then at $1,860.00. First support is seen at $1,839.00 and thenat the overnight low of $1.823.00. Wyckoff's Market Rating: 7.0.

The silver bulls have the slight overall near-term technicaladvantage. Silver bulls' next upside price objective is closing December futuresprices above solid technical resistance at $25.00 an ounce. The next downside priceobjective for the bears is closing prices below solid support at $23.00. Firstresistance is seen at the October high of $24.92 and then at the September highof $24.945. Next support is seen at $24.00 and then at $23.75. Wyckoff's MarketRating: 5.5.

By Jim Wyckoff

For Kitco News

Follow @jimwyckoffjwyckoff@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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